Federal Regulators Seize IndyMac Bank

The real estate market is obviously not going to wait for Congress to act.  It is making decisions on its own as to what banks and companies will survive the real estate meltdown.

According to CNNMoney, in what in what is likely to be the most expensive bank failure ever, troubled mortgage lender IndyMac Bank was taken over by federal regulators.  The operations of the Pasadena, Calif.-based bank were shut down by the Office of Thrift Supervision and transferred to the Federal Deposit Insurance Corp.

The clean up of this bank is expected to costs the Deposit Insurance Fund between $4 billion and $8 billion, and worse still it is expected that 10,000 IndyMac customers could lose as much as $500 million in uninsured deposits.

IndyMac, with assets of $32.01 billion and deposits of $19.06 billion, is the fifth bank to fail this year. Between 2005 and 2007, only three banks failed.  IndyMac marks the largest bank collapse since 1984, when Continental Illinois.

Most media is reporting extensively on what will happen to depositors in the bank.  The bigger question it seems is what does this do to already pressed mortgage borrowers (debtors).  As these troubled mortgage loans are sold off the collections activities against the borrowers are likely to become more aggressive.  This will undoubtedly have a big impact on bankruptcy filings and bankruptcy based litigation.